The big deal

Bobb wants Detroit's debt forgiven in exchange for new district administration ... or else

Faced with an admitted cumulative deficit of $332 million, Detroit Schools' emergency financial manager is proposing a sweeping deal under which the state would forgive the school system's debt in exchange for a complete overhaul of district operations and structure. He's calling that Plan A.

The only alternative, according to documents drawn up by Robert Bobb for the state Department of Education, would be extensive cuts, including high school lecture classes of 62 students and the closure of 100 additional schools. That's Plan B.

Plan A "is not complete," says Bobb's spokesman, Steve Wasko, who discussed some principles of the forthcoming proposal with Metro Times. "It's being formulated at the moment."

But such a deal is needed, he says. Balancing the district budget by cuts alone would be "draconian," Bobb wrote to the state this year. In a July 29 memo, he outlined a plan to use current and projected revenues in the district's roughly $1 billion operating budget to pay off the previous and continuing deficits.

Under Plan B, the district would have to close dozens more schools, raise class sizes to 31 pupils in the primary grade classrooms and 62 students in high school lecture halls, eliminate student transportation, send administrative, financial and legal operations to the city or another entity and make other major reduction efforts, officials say.

"It is an unreasonable route, we believe, to resolve the fiscal crisis," Wasko says. "I think we all agree this is not a situation you can cut your way out of."

So Bobb, who was appointed by the governor in 2009 and has a contract through February, is advocating Plan A, which involves asking lawmakers for a deal: Repay or forgive the roughly $332 million the district owes — in exchange for an overhaul of how the state's biggest school system is run. Such a plan could also set a precedent for other struggling districts to enact major reforms and accept some state control in exchange for the state accepting debt.

"It is a huge story with wide implications potentially," says David Arsen, professor of educational administration and education policy at Michigan State University. "Without knowing the specifics of it, it's difficult to say anything about prospects for success."

Bobb's request is short on details but long on chutzpah and even threats, district employees, politicians and other education observers told Metro Times. And it's been kept reasonably quiet.

"It wasn't accompanied by all the bells and whistles his announcements usually have, that's for sure," says Anthony Adams, president of the Detroit Board of Education. "When we got a look at this plan, we were like, 'This is fricking frightening.'"

Bobb will reveal more details of his proposal within weeks after next month's election, but Wasko tells Metro Times they will be in line with the state's new "Race to the Top" legislation.

That package of bills included allowing state supervision of struggling schools, an alternative process for teacher education and certification, and additional charter and cyber schools. That also means reduced power and influence for employee unions and possibly more state management.

"I'm not saying a bold move isn't needed," says Rep. Bert Johnson (D-Highland Park), chair of the House Detroit Caucus. "If we're talking about getting rid of the debt that is hanging over the district's head, I'm going to be willing to listen and the Detroit legislators are going to be all ears, but at the same time I don't think anybody is going to be willing to throw the baby out with the bath water either."

The plan as presented thus far is that control of local education in Detroit could be shifted away from traditional boards of education and employee unions and to whatever leadership new legislation creates. Depending on how the legislation is written, it could affect other financially troubled districts.

How such districts, including Detroit, would be governed is not part of Bobb's proposal thus far, Wasko insists. So it's unknown what future Bobb could propose for a locally elected board, or a superintendent who reports to one, or if the plan would have a provision for mayoral control of the beleaguered district as many, including Granholm, have suggested.

A big question is whether such a plan could get through the Legislature. Would the Detroit Caucus be willing to support such a change? And — at a time when the state is struggling with major budget woes of its own — would the rest of the state legislators approve of state funds going toward Detroit's debt even in exchange for radically changing how the district operates?

"From a feasibility standpoint, I guess I'm going to hold my breath about its ability to get through the Legislature," Johnson says. "We would probably want to see it in full and have the DPS make a presentation to us and sink our teeth into it."

What's clear thus far is the plan would mean a major departure from business-as-usual at the roughly 76,000-student district where the only constant has been changes in leadership.

Bobb is the fifth leader — superintendent, interim superintendent or emergency financial manager — in five years in Detroit schools. Between 1989 and 1999, four different superintendents led the district, which was under state control from 1999 to 2005.

'An act of betrayal'?

Keith Johnson, president of the Detroit Federation of Teachers, which represents about half the district's total employees, says he hasn't been contacted about Bobb's effort.

"That is part of the problem," Johnson says. "Education reform has to be done in a collaborative mode, which means working on a plan together, from the beginning through implementation. But he wants to do this in isolation."

Johnson survived a recall effort earlier this year led by a faction of the DFT unhappy about concessions Johnson accepted — and urged members to ratify — in the most recent collective bargaining agreement.

With Bobb now proposing — possibly — to eliminate union contracts through whatever financial or budgetary deal the Legislature could work out, Johnson is insulted. "As far as I'm concerned, this is an act of betrayal," he says. "For him to turn around and draw up a plan like this in isolation is an insult to me, my membership and this entire community."

The Legislature would have to approve whatever plan Bobb presents and the governor would need to sign it into law, but it's unclear how much lobbying he's done. Liz Boyd, Granholm's spokeswoman, did not return telephone calls or e-mails seeking comment. Neither of the chairmen of the Michigan Senate or the House education committees made themselves available for interviews — Sen. Wayne Kuipers, (R-Holland) or Tim Melton (D-Auburn Hills). And neither of the major party gubernatorial campaigns replied to requests for comment.

Bobb is on schedule to ask the current Lansing leadership to consider the plan, his spokesman says, but it could spill over into the next political era in which leaders will be asked to pay off Detroit's debts for the chance to redesign — and possibly wield more control over — the district.

"The plan ostensibly and conceptually says you can have a fresh start in financing in exchange for the academic reforms that would put the district in a good position to survive and prosper moving forward," Wasko says. "It would put the district on a firm footing to move forward in exchange for academic reforms."

The few tenets of the debt-forgiving, reorganization plan Wasko described promise a fundamental, sweeping change of the educational system in Detroit. The plan also bears resemblance to the reforms being proposed and debated at the national level for teacher training, accountability and measuring student achievement.

"It's the kind of comprehensive legislative and academic remedy that would be hard to get approved without virtually all of the political leadership being aligned on the fact that this is important and needs to be done," Wasko says. "When it's complete, it will certainly be something that will have to by definition be shared with the broader community. It's going to take everyone's support, it's going to take a strong will on the part of the political and community leadership to see it through."

The proposal will be unveiled Nov. 15 — two weeks after the election that will change the Michigan Legislature and replace the term-limited governor — and Wasko says the district hopes the current Legislature will take up the proposal.

"It would in all likelihood require various legislation and it would be preferred that that take place as quickly as possible," he says.

But Rep. Tim Bledsoe (D-Grosse Pointe), a member of the education committee, questioned the wisdom of trying to force legislation through in the final weeks of this session. "I don't think this is something that could or should be done until after Jan. 1. I don't think you should have a bunch of lame duck political leaders making decisions of this importance. Everybody who is in a position of importance is a lame duck — the House, Senate, governor," he says. "If this is the kind of major, game-changing undertaking being described, it just seems like the right thing is for this to be done by people who are going to be in office long enough to assume responsibility for the outcomes."

Close 100 more schools?

Michigan law requires Bobb, as the emergency financial manager, to determine how the district will balance its budget by June 2013, the end of that fiscal year. As part of that process, Bobb submitted a document to the Michigan Department of Education in July for how he would remedy the outstanding, increasing $332 million deficit. State officials reviewed it, discussed it in person and on the telephone with Bobb and eventually approved it in August, Wasko says.

In the document, Bobb presents Plan A, which is the reorganization of the district. He follows it with the much more detailed Plan B which describes the cuts he calls "draconian." Among them:

• Closing 30 schools this academic year, 40 the next and another 30 in the 2012-2013 year;

• Implementing a "lecture hall" model for high schools, with classes as big as 62 students. The current contract prescribes 35 students per class;

• Raising K-3 classes from 25 to 31 pupils;

• Abolishing the finance division — which handles accounting, payroll, risk management, budget and contracting — and sending the work to the city of Detroit or "other entities";

• Eliminating transportation for the approximately 23,000 students who have it now;

• Closing the eight alternative schools the district currently operates;

• Eliminating the ROTC program in the high schools.

"It is an unreasonable route, we believe, to actually resolve the fiscal crisis because it creates, as you can see, a number of extremely draconian actions and takes class sizes up," Wasko says.

But as it stands, Plan B is what the law requires Bobb to do: create a balanced budget. "It's what we have to pursue," Wasko said.

Because the deficit has grown so high — roughly one-third of next year's operating budget — drastic measures are the only way out, despite Bobb's initiatives and union concessions that have reduced the current year's budget by $86 million, Wasko says.

In addition, according to Bobb's memo to the state, the district last year lost revenue from uncollected Wayne County property taxes, received less money than anticipated in state stabilization stimulus funds and educated more students than were funded by the state because they were not part of the official count.

"It's been a very rapid, acceleration of the downward spiral of the DPS enrollment, and resulting revenues declines and the cumulative deficit would only get worse. You can't keep cutting without losing more parents and bringing everything down further," Wasko says. "You can't cut fast enough to stay ahead of the curve."

Bobb would prefer to pursue Plan A, his spokesman says, and has begun to "sell" it around the state even as details are being worked out.

Consolidate districts?

In Bobb's recommendations from July, he called for splitting the district into two systems as part of Plan A. One would have provided a traditional education setting and the other would have been set up with the new reforms. But Bobb has since decided that won't take place. What could happen is a second administrative entity would be set up to deal with the debt issues, much as corporations do during bankruptcy proceedings, Wasko says.

"It's a financing mechanism and would not be obvious to parents and has no impact whatsoever on overall governance questions, which remain to be resolved long-term, separately," Wasko says of how Bobb's eventual plan could be administered.

In either scenario Bobb has laid out — draconian cost-cutting or dramatic systemic reforms — Wasko foresees some consolidation of services with the city or other public entities. It makes no sense, he offers as an example, that the district cuts the grass on school property up to the property line of the city-owned parcel adjacent to it. "Surely there is some efficiency that can be had in those kinds of situations," Wasko says.

Meanwhile, other state initiatives seem to be — coincidentally perhaps — supporting the proposal. Last month Mike Flanagan, the state superintendent of public instruction, began a national search for a director of the Michigan Department of Education's new Office of School Reform and Redesign, a unit prescribed by the national Race to the Top initiative. The office is authorized to develop and implement reforms for public schools that do not improve student achievement.

Bobb's proposal comes at a time when "Race to the Top" is influencing thinking about education nationwide and other sweeping ideas are being put forward for education in the state.

A study released last summer by the Education Policy Center at Michigan State University found that Michigan taxpayers could save $612 million annually by consolidating districts along county lines.

The savings come from trimming school management layers, sharing services and combining purchasing power. No schools would have to be closed or students moved to produce the study's projected outcomes.

But the state's long history of local control has prevented any measures in the past, the report's authors said.

Still, consolidation — however it's defined — is a subject that's starting to be more seriously considered in Lansing, Johnson says, tough as that may be to sell to voters.

"Consolidation. Saving money. Means of efficiency. Those are all nice, good, proper, fitting ways to kind of move government forward," Rep. Johnson says. "And it raises money, frankly, without asking taxpayers to do it in a different way. That's sexy, new and is the cutting edge."

Could now be the time for monumental change in the district? Rep. Fred Miller (D-Mount Clemens), who sat on the education committee for the first two of his three terms in the Legislature, says Detroit Public Schools has reached a crisis.

"The status quo is unconscionable," says Miller, who questions the state's ability to absorb the Detroit Public Schools' debt. "That being said, arguably school districts are by state law entities of the state and the state bears a certain amount of responsibility for them. I believe that everybody of every political stripe wants to do right by the students and the families of Detroit."

Whatever's being done this year could continue for years and the impact felt by generations of Detroit families.

"Robert Bobb is going to be gone in five months, but this community is going to have to live with the remnants of what he leaves behind," the DFT's Johnson says. "It looks like he is content to try and break the district apart."

Arsen, the academic policy researcher from Michigan State, won't speculate specifically on whether Bobb's Plan A would likely improve education for Detroit pupils. "What I can say is that for the most part, governance changes have not been the sources of great success in American schools," he says.

Charter schools, for example, have had mixed results in their effect on student performance. Some cities — like Washington D.C. — have put schools under mayoral control, but Arsen calls outcomes there "not impressive."

"Here are two examples of education reforms that are premised primarily on changes in governance and so far neither has provided a silver bullet for improving educational outcomes," Arsen says. "They had great appeal politically but their track record in improving the prospects for children is not so good. They're not bad, they're just not clearly better than the traditional public schools, but what they do change for sure is who has influence over the education of children."